What feature describes bonds where the interest rate can increase over time?

The feature that describes bonds where the interest rate can increase over time is known as "Increasing Rate Bonds." These bonds typically start with a lower interest rate that rises at predetermined intervals throughout the life of the bond. This feature is advantageous for investors, particularly in a rising interest rate environment, because it allows their yield to increase over time, potentially leading to higher returns compared to fixed-rate bonds, which maintain the same interest rate throughout their term.

In contrast, variable rate bonds allow interest payments to change at specified times based on market rates, but they can decrease as well as increase. Reset bonds also have interest rates that can be adjusted but are typically linked to a specific benchmark rather than predetermined increases. Flat bonds, on the other hand, do not have increasing rates at all; they offer a fixed interest rate for their entire duration. Understanding these distinctions helps investors choose the right type of bond to fit their investment strategy and income needs.